List Management's Many Challenges

From the list manager's perspective, e-mail marketing for customer acquisition is very different from employing postal mail.

These differences pose many challenges when it comes to earning money in the medium. To market e-mail lists successfully, list managers must overcome the following challenges:

· They must avoid losing names through opt out.

· They often do not know how much of their mailing has been delivered.

· And they must battle frequently one-sided rental terms.

Unlike postal list management, e-mail list management is usually a hybrid of traditional list management and compilation or licensing of lists. E-mail lists must contain explicitly permissioned addresses that the manager either owns or markets for others. In addition to list rental, services often include broadcasting the actual e-mails and tracking the resulting e-mail opens (traceable for HTML e-mail) and click-throughs to clients' sites.

A major difference from postal mail is poor knowledge of whether each e-mail has been delivered. Bounce-backs, which can range from 2 percent to 20 percent of the mailing, are similar to postal mail.

However, the reasons differ.

If no response is received, the message may have been opened by a non-HTML mail client (40 percent of recipients) or deleted by the destination system or by the user.

E-mail addresses turn over, are abandoned or just ignored far more than physical addresses. Forwarding services for e-mail are immature compared with postal forwarding.

E-mail list managers also suffer consequences from online opt out. All reputable e-mail marketers provide a convenient (often one-click) method for permanently opting out of all future mailings. Opting out of postal direct mail is qualitatively more difficult. If it were as easy to withdraw permission from direct mailers as from e-mailers, every outgoing mail piece would include a business reply card to the Direct Marketing Association's Mail Preference Service.

Every outbound e-mail can result in a permanent loss of inventory for the list manager and owner. Opt-out rates of 2 percent to 5 percent per mailing endanger the core e-mail list inventory.

Another challenge arises because a manager's need to rent e-mail lists (and earn revenue) is at cross-purposes with maintaining and growing the list. Paradoxically, the more e-mails are broadcast, the more the list is liable to shrink. The list manager must continually replenish the list to offset the attrition of opt outs.

Rental terms for e-mail lists often exacerbate the problem.

List renters increasingly prefer cost-per-click and cost-per-action rather than traditional cost-per-thousand terms. Compared with the postal world, CPC/CPA changes the incentive equation for both mailer and list manager. To maximize revenue, satisfy customers and conserve their lists, the list manager balances the size of the e-mail broadcast against the likely losses from opt outs. The direct mailer, on the other hand, wants the list manager to blast his e-mail offer out to the entire list. Under CPC or CPA, the list manager's problem is that the mailer does not compensate him for the future lost revenue stream for each address that permanently opts out.

CPC and CPA deals often lead to effective CPM revenue to the list manager, which is a fraction of what an actual CPM deal would yield.

It appears that CPC/CPA rental terms put the risk burden on the list manager. However, the difficulty is not that e-mail CPM or CPC/CPA deals are intrinsically more or less fair to mailer or list manager. A more balanced view is whether the pricing of the list adequately reflects the risk that each party is assuming, given the rental terms.

Rather than running from CPC/CPA deals, the e-mail list manager has tools to level the playing field.

Do not broadcast indiscriminately.

Learn from experience how to select the best list for each type of offer. Be selective about the type and quality of creatives and offers broadcast to your list.

Track opt outs and learn what causes them. Say no to e-mail clients whose messages cause high opt outs. Limit the frequency of messages over a period of time.

Ensure that the message is relevant and personalized to what the customer signed up for when joining the list. Relevance and personalization increase response and decrease opt out.

Employ predictive response models based on past campaigns to maximize response and minimize opt outs. As in the offline world, they work well in lifting e-mail response and reducing opt-outs.

As e-mail list prospecting matures, the more sophisticated list managers will not merely survive, but thrive.

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